More information on NVIDIA's chipset business

It would appear I stirred up quite the dust cloud when I wrote that NVIDIA was essentially exiting the chipset business in my recent "State of NVIDIA" editorial. Everyone from the Wall Street Journal, to MarketWatch, to PC Magazine and even CNet have put in their two cents about the ordeal. As you might imagine this got NVIDIA's attention and while they were at first NOT going to put out a statement on the issue, they obviously changed their minds this afternoon. I'll break up their statement a bit at a time with commentary in between:

We've received a number of inquiries recently about NVIDIA's chipset (MCP) business. We'd like to set the record straight on current and future NVIDIA chipset activity.

On Intel platforms, the NVIDIA GeForce 9400M/ION brands have enjoyed significant sales, as well as critical success. Customers including Apple, Dell, HP, Lenovo, Samsung, Acer, ASUS and others are continuing to incorporate GeForce 9400M and ION products in their current designs. There are many customers that have plans to use ION or GeForce 9400M chipsets for upcoming designs, as well.

This is completely correct - NVIDIA is not closing their doors on selling or producing existing chipsets, either for AMD or Intel platforms. The GeForce 9400M and the ION names are, as of right now, essentially referring to the same product - the one used in all current Apple MacBook Pro machines (as well as several of the Apple iMac configurations) and numerous netbooks and nettops like the HP Mini 311.

The HP Mini 311 powered by NVIDIA ION

It is also true that there are as-of-yet unannounced systems coming out this fall and winter based around the ION platform that will continue to drive revenue for NVIDIA into 2010.

On AMD platforms, we continue to sell a higher quantity of chipsets than AMD itself. MCP61-based platforms continue to be extremely well positioned in the entry CPU segments where AMD CPUs are most competitive vs. Intel

This statement is basically telling us "hey, we still are selling those chipsets we released in 2006 for the AMD platform." While that is true, the product is not being updated or innovated at all. But as long as NVIDIA can sell it to partners and make a profit, I am sure they will continue to do so.

We will continue to innovate integrated solutions for Intel’s FSB architecture. We firmly believe that this market has a long healthy life ahead. But because of Intel’s improper claims to customers and the market that we aren’t licensed to the new DMI bus and its unfair business tactics, it is effectively impossible for us to market chipsets for future CPUs. So, until we resolve this matter in court next year, we’ll postpone further chipset investments for Intel DMI CPUs.

There are two key points in this statement. First, NVIDIA claims they are continuing to innovate for Intel's platforms where there is a front-side bus involved as that is the one area that without a doubt NVIDIA knows they are permitted to develop for. I do know that NVIDIA has just one more chipset planned for this segment, what we essentially know as the ION 2 platform, that is being built pretty much exclusively for a single major OEM - of the fruit variety. Surely you didn't think Apple would base almost its entire line of products on a technology without an upgrade path? Might we see ION 2 in other platforms like netbooks and component-level products? Probably, but ION 2 definitely only has a single target in mind.

If we consider the fact that ION 2 is basically a completed product at this time, with only very minor changes and tweaks being done to suit the OEM in question, then we can rest assured that chipset development at NVIDIA is essentially over - just to reiterate my original point.

The original ION reference board

The second point made by NVIDIA here is that they are no longer developing for the current generation desktop Intel platforms because they have essentially be locked out of the platform by Intel's legal department. The debate will rage on for months if not years about who is legally correct here, but it will not matter - NVIDIA has decided it is not worth the cost to do business with Intel in this area. Intel has a nasty reputation for pushing out competition like this and it seems obvious that it has happened once again.

Despite Intel's actions, we have innovative products that we are excited to introduce to the market in the months ahead. We know these products will bring with them some amazing breakthroughs that will surprise the industry, just as GeForce 9400M and ION have shaken up the industry this year.

We expect our MCP business for both Intel and AMD to be strong well into the future.

A cheery conclusion, but one that simply tries to hide the fact that NVIDIA is leaving the once-profitable chipset business behind. The term "well into the future" is purposely ambiguous after all - ION and the ION 2 product could in fact last into 2011 if NVIDIA plays its cards right or it could fizzle out in mid-2010 depending on how aggressive Intel becomes on pricing, etc. After ION 2 sees the door we can assume that parts of the chipset team at NVIDIA will survive to do marketing and support of the product but engineers will be reassigned or looking for new work outside the company.

If you want to read up on the current status of NVIDIA as a whole, including graphics, GPU computing, gaming and chipset markets, I recommend you read over my recent State of NVIDIA: For better or for worse editorial posted earlier in the week.

Comments or questions? Feel free to write me directly or to join in the discussion in the PC Perspective Forums.